In January 2015, United Effort Plan trust (“UEP”) filed suit against Twin City Water Works (“TCWW”), alleging that for a number of years TCWW has unlawfully pumped water from UEP land without compensating UEP. Additionally, UEP claimed that the utility was funneling revenues generated from Hildale and Colorado City residents to FLDS leaders and TCWW employees, while at the same time charging residents unreasonably high rates (i.e., $12,000 impact fee for a water meter) and providing little or no benefit to residents in return.

UEP Taken Over by State Amid Concerns About FLDS Trying to Bankrupt UEP

The UEP was formed decades ago by FLDS church leaders seeking to manage residents’ “consecrated” properties under a communal system, but Utah’s court system took over the management of the UEP a decade ago amid concerns that FLDS leaders were defaulting on their responsibility to defend trust members’ holdings and driving the trust toward insolvency. The state’s management of the UEP trust created a situation where FLDS members have been pitted against the trust they had established in an ongoing adversarial relationship.

UEP’s Lawsuit Seeks Control of Water Distributed From UEP Land

UEP’s lawsuit seeks control of the water distributed from UEP owned land, as well as back payment for water taken from the land without compensation to UEP. It has been alleged that TCWW earned and disbursed more than $4.3 million between 2002 and 2009, none of which was paid to UEP, and that $1.7 million of that was diverted for purposes wholly unrelated to TCWW. UEP also seeks to have the court put in place a new system of water distribution management to ensure that TCWW is not allowed to take water from UEP land without providing compensation in the future.

Judge Westfall Takes Question of Who Should Control Short Creek Water Rights Under Advisement

The question of who will control the water rights in the Short Creek area is now in the hands of Fifth District Judge G. Michael Westfall. Late last month, after accepting an agreement between TCWW and UEP, which resolved a number of the issues regarding water rights in the border towns of Hildale and Colorado City, Judge Westfall took under advisement arguments over who has the right to control the water in the neighboring municipalities.

Over the objection of TCWW, Judge Westfall agreed with UEP, ruling that the Fifth District had jurisdictional authority to decide who has control over the water on the Arizona side of the border. TCWW had argued to Judge Westfall that a Mohave County (Arizona) court should decide the issue, but Judge Westfall disagreed. As a result, for now, the fate of the water on the Arizona side of the border lies in the hands of a Utah judge.

UEP Argues Its Ownership of the Land Gives it Right to Control Water

In support of its argument that it is entitled to control the water between Hildale and Colorado City, UEP attorney, William Walker, argued that, on account of the fact that UEP owns the land, the law gives UEP sole control over collecting underground water through a “right of fiduciary” and to control surface water via existing property rights.

TCWW Compares Easement to Hunting Permits

In response, James Spendlove, the attorney for the TCWW utility, compared access to underground water to a hunting permit, arguing that, so long as an individual has a permit to hunt animals and is allowed to be on the land, then that person has the right to kill and take the animal and benefit from the meat without having to give the meat back. Spendlove told the court that UEP granted TCWW an easement some forty years ago to allow TCWW to place its well equipment on UEP’s land and draw water from the ground under the land. Spendlove also noted that TCWW has an Arizona permit for it well operations.

UEP Says Easement Granted Access Only

UEP replied that the easement granted to TCWW gave the utility access to the water, but it did not vest any control over the water rights in TCWW. According to UEP, such rights would have to be conveyed in a separate document, and that TCWW rejected the idea of easement rights to the water, alleging that TCWW had the right to take the water by way of “unrecorded leases.” TCWW has been unable to produce these alleged “unrecorded leases,” UEP told the court.

UEP’s Suit One of Many Legal Woes for TCWW

Judge Westfall has not given a timetable for his decision. Even still, the battle over the water rights in Hildale and Colorado City is not the only legal trouble the TCWW has had to face over the last year or so.

Utah AG’s Office Sues TCWW Over Illicit Funding of FLDS Church

In March 2015, the Utah Attorney General’s Office filed a lawsuit against TCWW, which asked Washington County, Utah’s Fifth District Court to close down the utility. The lawsuit was filed as part of the efforts to disrupt the allegedly illicit funding of the FLDS church. According to the complaint: “The officers of (Twin City Water Works) are not properly discharging their duties, have no knowledge of the operations of the nonprofit corporation, and appear incapable of ensuring that the nonprofit properly uses its revenue to improve, maintain, and expand the TCWW water system.”

“The TCWW water system is in very poor condition, and it appears that little revenue, if any, has been used for the maintenance, expansion, or development of the TCWW water delivery system,” the attorney general’s complaint summarizes.

Willie Jessop Sues TCWW Seeking to Tie Utility to FLDS Church

Just one month later, Hildale businessman and former security representative for the FLDS church, Willie Jessop, filed his own suit against TCWW, seeking to tie the utility to the FLDS church, which owes Jessop approximately $30 million dollars by way of a default judgment entered against the church in 2012.

TCWW Pleads Guilty to Tax Evasion

The TCWW utility also pleaded guilty to tax evasion last year, acknowledging it had failed to pay corporate tax on income of $112,634 per year between 1996 and 2013. The plea agreement stated the company owed $147,624.61 in back taxes, plus another $223,000 in interest and penalties.

No Water Without Compensation

While it remains to be seen what Judge Westfall will decide as it relates to water rights in the Short Creek Area, it is clear that the UEP wants a new system put in place to ensure TCWW cannot remove water from UEP land without compensating UEP. Like others suing the utility, UEP appears increasingly concerned that revenues generated by TCWW are neither being paid to UEP nor are being used to maintain the TCWW water system. Instead, those funds appear to be lining the pockets of FLDS leaders and TCWW employees.

Hildale/Colorado City Residents Real Losers in Water Rights Dispute

Beyond UEP, the big losers in the battle over water rights in the Short Creek area are the residents in Hildale and Colorado City that are being victimized via unreasonably high rates charged by TCWW. Hildale instituted a steep hike in impact fees for water services in March 2015. UEP employees said the hike in impact fees frustrated efforts to sell some vacant lots without water and sewer at an auction earlier in the month.

Another issue affecting the auction was the cost of constructing an 8-inch water main to some of the properties. “The city is telling them these lots will not be served until we get an 8-inch main to serve the entire area because we can’t just take 1-inch, 2-inch lines off of a 1-inch, 2-inch line,” UEP employee Jethro Barlow said. UEP attorney Jeff Barlow said a problem with the requirement is Hildale is asking each resident to pay for the entire stretch of pipe to their property, so at $25,000 per block, a resident four blocks from the access point would pay $100,000. So would any other residents within the 4-block area, he said.